From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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Treasury confirms FPC directional powers over buy-to-let market

Following a consultation earlier in the year, the Treasury has now confirmed that the Bank of England’s Financial Policy Committee (FPC) will be granted new powers over the buy-to-let market in order to protect the financial system from future risks. From early 2017, the FPC will be able to direct the Prudential Regulation Authority and the Financial Conduct Authority to require regulated lenders to place limits on buy-to-let mortgage lending in relation to loan-to-value ratios and interest coverage ratios. The government has published both its response to the consultation, and the related draft regulations.

Housing white paper speculation

It has been reported that ministers are considering abandoning height limits in a bid to build more homes. In advance of the awaited housing white paper, The Sun has reported that communities secretary Sajid Javid wants to relax planning rules that prevent new homes being built higher than their surrounding buildings. The article also suggests that councils will be required to put together new five-year plans for housing.

Speaking at a Building Societies Association event, housing minister Gavin Barwell said the housing white paper will include new ways to improve planning and house building to enable the government’s target of a million homes to be built by 2020. Mr Barwell called on building societies to help facilitate a more diverse house building sector by supporting small, self and custom builders, and modern methods of construction including off-site construction: “we want to move away from a system where 90% of homes are built using traditional methods”, he said.

Latest DCLG figures show annual housing supply in England amounted to 189,650 net additional dwellings in 2015-16, up 11% on 2014-15. However, just 3,430 affordable homes were built in England during 2015/16, the lowest number since 1991/92.

Redfern review on home ownership

The financial squeeze on young people, and not a lack of housing supply, is at the heart of the decline in home ownership, according to the conclusions of the Redfern Review into the fall in the levels of owner occupation. This independent review was commissioned by Labour’s shadow communities secretary John Healey and led by chief executive of Taylor Wimpey Pete Redfern. It found that the primary causes for the 6.2% fall in home ownership between 2002 and 2014 are increased mortgage costs and tougher regulatory constraints for first-time buyers following the financial crisis in 2008, coupled with a long-term decline in the incomes of younger people. While the rapid increase in house prices between 2002 and 2014 has also been cited as a barrier to home ownership in the report, it suggests that this has not been primarily driven by lack of supply.

The review concludes that while home ownership is important, we should focus on all housing tenures in order to create a fairer housing market accessible for all. The review proposes the establishment of an independent Housing Commission which can drive future housing strategy and take a non-partisan approach to long-term housing decisions. The review also makes a number of policy suggestions to support the rate of home ownership and housing supply. These include re-targeting Help to Buy more exclusively to first-time buyers and at lower price points on a regional basis, and retaining Starter Homes on exception sites only and with the first-time buyer discount retained in perpetuity.

Social Mobility Commission's State of the Nation report

Meanwhile, the Social Mobility Commission’s State of the Nation 2016 report warns that Britain has a deep social mobility problem, which is getting worse for an entire generation of young people. The impact of which is not just being felt by low-income families, but by tranches of middle-income families as well. The report recommends a 10-year programme of social reform to deal with structural problems. On housing specifically, the report calls on government to commit to a target of building 3 million homes over the next decade; expand the sale of public sector land and allow targeted housing building on green belt land; modify starter homes to focus on households with average incomes and ensure the discount remains when sold on to other low income households; introduce tax incentives to encourage longer private sector tenancies; and complement plans to redevelop the worst estates with a £140 million fund to improve opportunities for social tenants to get work.

Think tank housing reports

And finally, housing was the subject of two think tank reports this week:

Power Behind the Home published by Localis argues that only by affording local authorities greater flexibility around finance and land can the government hope to achieve the million new homes target by 2020.